On October 4, 2017, the Department of Justice (DOJ) delivered a blow to the rights of transgender Americans. Attorney General Jeff Sessions rescinded an Obama-era policy concluding that the Civil Rights Act bars workplace discrimination against transgender employees. Specifically, Sessions revoked a 2014 memo authored by then-Attorney General Eric Holder that said gender-identity discrimination fell under Title VII’s sex-discrimination umbrella. In 2014, Holder had announced that the agency had taken the position that Title VII of the Civil Rights Act, which bars discrimination “because of sex,” forbids transgender discrimination in employment.

But in the October 4 letter released on behalf of the DOJ, Sessions stated the agency’s official position that Title VII “does not prohibit discrimination based on gender identity per se, including transgender status.” Sessions’ announcement is at odds with the majority of federal courts that have analyzed this question, and is also at odds with the current position of the Equal Employment Opportunity Commission (EEOC). So the DOJ’s position comes amid growing confusion as to whether “sexual orientation” and “gender identity” are protected under Title VII.

The letter is directed to all U.S. Attorneys and heads of federal agencies which means that the DOJ will take this position in all pending and future matters. Eventually, the interpretation of Title VII will be decided by the Supreme Court, but until then the DOJ will weigh in with its position except where controlling lower-court precedent dictates otherwise.

Legal Landscape Surrounding Title VII and Sexual Orientation Discrimination

The U.S. Supreme Court’s 1989 ruling in Price Waterhouse v. Hopkins has set the backdrop to much of the discussion regarding transgender employees and workplace discrimination. In Price Waterhouse, the Supreme Court recognized “sex stereotyping” as a valid form of sex discrimination under Title VII. Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). The Court held that employees can state a viable claim for sex discrimination when they experience discrimination based on their failure to adhere to traditional gender norms.

The EEOC has taken a lead role in enforcing the protections for transgender workers. The EEOC interprets and enforces Title VII’s prohibition of sex discrimination as forbidding any employment discrimination based on gender identity or sexual orientation. The EEOC has been consistent to state its position that discrimination based on a person’s transgender status is sex discrimination under Title VII. Furthermore, in Lusardi v. Dep’t of the Army, the EEOC held that a federal agency that denied an employee equal access to a common bathroom/facility corresponding to the employee’s gender identity discriminated on the basis of sex. Lusardi v. Dep’t of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756.

On April 4, 2017, the United States Court of Appeals for the Seventh Circuit, sitting en banc, became the first federal appellate court to officially recognize a discrimination claim under Title VII based on sexual orientation. In Hively v. Ivy Tech Community College of Indiana, the Seventh Circuit concluded that sexual orientation discrimination is a form of sex discrimination under Title VII. Hively v. Ivy Tech Cmty. Coll. of Ind., 853 F.3d 339 (7th Cir. 2017). The court reiterated the Supreme Court’s reasoning in Price Waterhouse that a policy that discriminates on the basis of sexual orientation is based on assumptions about the proper behavior for someone of a given sex. So far, the Seventh Circuit is the only federal appellate court holding that workplace discrimination based on sexual orientation violates Title VII.

In light of the differing positions taken by the DOJ, the EEOC, and the courts, it is likely in the coming months that the same type of situation will present itself in litigation over gender identity. It is unclear whether knowing the DOJ’s position will tip the scales in favor of a narrower interpretation of Title VII or whether the EEOC’s more expansive interpretation of Title VII will prevail. It also remains to be seen whether other circuits will join in with the Seventh Circuit in recognizing a discrimination claim under Title VII based on sexual orientation. As this continues to be a developing area of the law, employers should continue to monitor developments in this area and be prepared to revise their policies and practices accordingly. If you have any specific questions, please contact any of the labor and employment law attorneys at Gardere.